Heiwa Real Estate REIT : Additional Documentation for Press Release “Notice Concerning the Issuance of New Investment Units and Secondary Offering of Investment Units” May 22, 2023

Additional Documentation for Press Release

"Notice Concerning the Issuance

of New Investment Units and

Secondary Offering of Investment Units"

May 22, 2023

Disclaimer

This document arranges in order details released in the Notice Concerning Issuance of New Investment Units and Secondary Offering of Investment Units, and the Notice Concerning Acquisition of Assets (Kitahama 1-Chome Heiwa Building and Heiwa Real Estate Kitahama Building) dated May 22, 2023, and additional information incidental thereto. Please refer to the Notice Concerning Issuance of New Investment Units and Secondary Offering of Investment Units dated May 22, 2023 for the details of the offerings.

This document is not a disclosure document or a report on asset management based on the Financial Instruments and Exchange Act, the Act on Investment Trusts and Investment Corporations, and Government Ordinances, Cabinet Office Ordinances and regulations incidental thereto. This document is aimed at providing information. It was not prepared as a solicitation for investment. The Investment Corporation requests that investors make investments at their own discretion and on their own responsibility after reading, without fail, the prospectus for the issuance of new investment units and the offerings of investment units, and amendments thereto (if any amendment is made) prepared by the Investment Corporation. The Investment Corporation does not aim to offer specific products, solicit them, or recommend their purchase or sale through any information at its official website where this document is published (the "Website"), or any information published thereat or at sites linked to materials published thereat.

The details of this document include the Investment Corporation's strategies, targets, forecasts, other future outlooks related to its performance, and the descriptions of estimates associated with those matters. Those forward-looking statements are based on certain suppositions, assumptions and assessments the Investment Corporation and HEIWA REAL ESTATE Asset Management Co., Ltd. (the "Asset Management Company"), the company managing assets for

the Investment Corporation, made from information available at the time when this document was prepared. There are risks and uncertainties inherent in the statements, which along with suppositions and other factors may have an impact. Therefore, the strategies, targets and forecasts contained in this document do not guarantee the performance, operating results, financial position and the like of the Investment Corporation in the future. Actual results may differ materially from the performance, operating results, financial position and the like in the future indicated, explicitly or implicitly, by the presence of those statements associated with the forecasts and the like. The Investment Corporation does not guarantee or promise the achievement of the forward- looking statements, either. Please refer to the Notes stated below for suppositions and assumptions for the forward-looking statements.

This document contains charts, data, etc. prepared by the Asset Management Company based on information provided to the Investment Corporation and the Asset Management Company or published by third parties, and also contains present analyses, judgments, and other views of the Investment Corporation and the Asset Management Company. It is possible that different views may exist on these matters, and that the Investment Corporation and the Asset Manager may change their views in the future.

The Investment Corporation makes the content of this document doubly sure. However, the Investment Corporation does not guarantee the accuracy, reliability, validity and fairness of its content. Please note that the content may be subject to revision or cancellation without notice.

The Investment Corporation prohibits the duplication or other unauthorized use of the content of this document without prior consent.

Real estate investment trust issuer: HEIWA REAL ESTATE REIT, Inc. (securities code: 8966) Asset management company: HEIWA REAL ESTATE Asset Management Co., Ltd. (financial instruments business operator No. 316 (Financial Instruments Business) registered with the Director General of the Kanto Local Finance Bureau, and a member of the Investment Trusts Association, Japan)

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Intentionally Blank

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Offering highlights

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Steady Growth & Sustainable Profit

Continued strong external growth with awareness of the cost of capital and a significant increase in unitholder value

• Continued to acquire properties in a disciplined manner at a yield level above the implied cap rate by utilizing a variety of acquisition routes
• Achieved a high growth rate of +6.0% in adjusted EPU CAGR (excluding gains/losses on transfer, etc.) in the last six periods
• By securing sufficient acquisition capacity through the Offering, we plan to achieve further external growth and increase unitholder value.

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Ongoing corporate actions, including a public offering for the third consecutive year

• Promoted the expansion of investment unit liquidity through ongoing corporate actions, including a public offering for the third consecutive year
• Increase in the Investment Corporation's market weight in the J-REIT market and a significant expansion in institutional investors' holdings
• With plans to record gains on transfer for the thirteenth consecutive fiscal period, the Investment Corporation will realize long-term sustainable stable distributions by returning unrealized gains to unitholders and securing ample internal reserve

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Continued high performance in both the offices and residences under management

• Maintained high occupancy rates for both offices and residences through aggressive leasing after the COVID-19 pandemic
• Aggressive rent negotiations for properties with rent gaps led to upward revisions
• A highly stable portfolio composition with a focus on areas with high demand for office space

HF UENO RESIDENCE EAST

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Offering summary

Summary of assets to be acquired

Number of properties	Total Acquisition Price	Total Appraisal Value	Average NOI yield	Average Occupancy Rate
(planned)	91.1%
8 properties	14.5 billion yen	4.5 %
13.3 billion yen
(as of March 31, 2023)
	Office			Residence

Asset to be Transferred in the 44th FP

HF HATCHOBORI

RESIDENCE Ⅲ

Strategy for asset replacement

Key factors considered in the

selection of assets to be transferred

by the Investment Corporation

STAGE NISHIKI

Asset Acquired in the 43rd FP

Kitahama 1-Chome Heiwa Building		Heiwa Real Estate
	Kitahama Building
	Asset to be Acquired			Asset to be Acquired

HF UENO RESIDENCE EAST

Asset Acquired in the 43rd FP

HF NAKANO-SAKAUE

RESIDENCE

Asset Acquired in the 43rd FP

HF IMAIKE-MINAMI

RESIDENCE

Asset Acquired in the 43rd FP

HF OMORIMACHI

RESIDENCE

Asset Acquired in the 43rd FP

HF FUSHIMI RESIDENCE

Asset Acquired in the 43rd FP

• Assets with high potential for unrealized gains
• Assets with inferior future profitability relative to the portfolio
• Small residence
• Assets that encompass a variety of potential risks

Continuous external growth through asset replacement

• Improvement of portfolio quality through continuous asset replacement
• Return profits from the gain on transfer and control of internal reserve balance, while promoting the continuous acquisition of assets using the funds from the transfer

		After the previous offering		Assets to be acquired	.	Asset to be Transferred
			in the 44th FP
Number of Properties		119 properties		8 properties			1 property
Total Acquisition Price (planned)		212.7 billion yen		13.3 billion yen			0.7 billion yen
	49.8 % / 50.2 %	53.4 % / 46.6 %			0.0 % / 100.0 %
Office / Residence Ratio
		5.2 % / 4.2 %	4.5 % / 3.8 %			3.4 % / 2.7 %
NOI Yield / NOI Yield After Depreciation
			(Ratio of NOI to the scheduled transfer price)
	44.8 % / 38.5 %
LTV / Appraisal-basedLTV
	146,186 yen
NAV per unit

After the Transaction

126 properties

225.2 billion yen

50.2 % /49.8 %

1. % / 4.2 %

1. % / 39.9 %

147,392 yen

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